GEN 5.2 GEN 5.2 Application for a Financial Services Permission
A Person, who intends to carry on one or more Regulated Activities in or from the ADGM must apply to the Regulator for a Financial Services Permission, in accordance with the provisions in this Rule. Where the Person becomes aware of a material change in circumstances that is reasonably likely to be relevant to such an application whilst it is under consideration by the Regulator, then it must inform the Regulator in writing of the change without delay.
GEN 5.2.2 GEN 5.2.2(1) The Regulator will only consider an application for a Financial Services Permission from a Person who, subject to (2), (3) and (4), is:(a) a Body Corporate; or(b) a Partnership;and who is not a Recognised Body.(2) If the application is in respect of either or both of the following Regulated Activities:(a) Effecting Contracts of Insurance; or(b) Carrying Out Contracts of Insurance as Principal;the applicant must be a Body Corporate.(3) If the application is in respect of the Regulated Activity of Accepting Deposits, the applicant must be a Body Corporate or a Partnership.(4) If the application is in respect of the Regulated Activity of Acting as the Trustee of an Investment Trust, the applicant must be a Body Corporate.
The GPM sets out matters which the Regulator takes into consideration when making an assessment under Rule 5.2.2.
Carrying on service with or for a Retail Client
The following requirements must be met by an Authorised Person applying for a Financial Services Permission to carry on a Regulated Activity with or for a Retail Client:(a) the applicant must have adequate systems and controls for carrying on Regulated Activities with or for a Retail Client;(b) the applicant must have adequate systems and controls (including policies and procedures) to ensure compliance with the requirements in COBS relevant to Retail Clients;(c) the applicant must have adequate systems and controls to ensure that its Employees remain competent and capable to perform the functions which are assigned to them, in particular, functions that involve dealing with Retail Clients; and(d) the applicant must have adequate Complaints handling policies and procedures.
Acting as a Trade Repository
GEN 5.2.4 GEN 5.2.4
The requirements in Appendix 2 must be met by an Authorised Person whose Financial Services Permission includes a designation permitting the Authorised Person to maintain a Trade Repository.
Guidance1. Maintaining a Trade Repository is not a separate Regulated Activity but may be carried on by an Authorised Person or Recognised Body which has a Financial Services Permission with a designation permitting it to do so. An Authorised Person or Recognised Body maintaining a Trade Repository is subject to some specific requirements relating to that activity, which are set out in Appendix 2.2. The functions of a Trade Repository promote increased transparency and integrity of information, particularly for centrally clearing OTC Derivatives. Currently there are transaction reporting requirements in the ADGM under section 146 of the FSMR which require reporting to Trade Repositories.3. An Authorised Person or Recognised Body does not carry on the activities of a Trade Repository to the extent that it maintains records of transactions pursuant to the record keeping requirements applicable to that Authorised Person or Recognised Body (such as those relating to transactions carried out on behalf of the Authorised Person's Clients, or transactions carried out on the facilities of a Recognised Body).
A Person licensed by the Emirates Securities and Commodities Authority to trade on an U.A.E. exchange will not be granted a Financial Services Permission by the Regulator unless that Person has the prior approval of the Emirates Securities and Commodities Authority.
GEN 5.2.6 GEN 5.2.6
A Person applying for a Financial Services Permission must make an application in such form as the Regulator shall prescribe.
A Person submitting an application under Rule 5.2.6 is required to:a. pay the appropriate application fee as set out in FEES; andb. include information relating to its Controllers, completed by the relevant Controllers themselves, in such form as the Regulator shall prescribe.
Consideration and assessment of applications
In order to become authorised to carry on one or more Regulated Activities, the applicant must demonstrate to the satisfaction of the Regulator that it:(a) has adequate and appropriate resources, including financial resources;(b) is fit and proper;(c) is capable of being effectively supervised; and(d) has adequate compliance arrangements, including policies and procedures, that will enable it to comply with all the applicable legal requirements, including the Rules.
Adequate and appropriate resources
GEN 5.2.8 GEN 5.2.8(1) In assessing whether an applicant has adequate and appropriate financial resources, the Regulator will consider:(a) how the applicant will comply with the applicable provisions of PRU or PIN;(b) the provision the applicant makes, or, if the applicant is a member of a Group, which other members of the Group make, in respect of any liabilities, including contingent and future liabilities;(c) the means by which the applicant or, if the applicant is a member of a Group, by which other members of the Group manage the incidence of risk in connection with their business;(d) the rationale for, and basis of, the applicant's business plan;(e) whether the applicant's assets are appropriate given the applicant's liabilities;(f) the liquidity of the applicant's resources;(g) the nature and scale of the business which will be carried on by the applicant;(h) the risks to the continuity of the services which will be provided by the applicant;(i) the applicant's membership of a Group and any effect which that membership may have; and(j) whether the applicant is capable of meeting its debts as they fall due.(2) In assessing whether an applicant has adequate and appropriate non-financial resources, the Regulator will consider:(a) the skills and experience of those who will manage the applicant's affairs;(b) the applicant's willingness and ability to value its assets and liabilities and its resources to identify, monitor, measure and take action to remove or reduce risks as to the accuracy of such valuation;(c) the applicant's resources to identify, monitor, measure and take action to remove or reduce risks as to its safety and soundness;(d) the effectiveness of the applicant's business management; and(e) whether the applicant's non-financial resources are sufficient to enable the applicant to comply with:(i) requirements imposed or likely to be imposed on the applicant by the Regulator in the exercise of its functions; or(ii) any other requirement in relation to whose Contravention the Regulator would be concerned for the purpose of any provision of Part 19 of the FSMR.
Fitness and propriety
GEN 5.2.9(1) In assessing whether an applicant is fit and proper, the Regulator will consider:(a) the fitness and propriety of the members of its Governing Body;(b) the applicant's connection with any person or membership of any Group;(c) the suitability of the applicant's Controllers or any other Person;(d) the impact a Controller might have on the applicant's ability to comply with the applicable requirements;(e) the Regulated Activities concerned and the risks to their continuity;(f) the nature (including the scale and complexity) of the activities of the applicant and any associated risks that those activities pose to the Regulator's objectives described under section 1(3) of the FSMR;(g) whether the applicant's business model will allow for its affairs and business to be conducted and managed in a sound and prudent manner, having regard in particular to the interests of consumers and the integrity of the ADGM;(h) whether those who manage the applicant's affairs in accordance with (g) will have adequate skills and experience and will act with probity;(i) any matter which may harm or may have harmed the integrity or the reputation of the Regulator or ADGM, including through the carrying on of a business by the applicant for a purpose connected with a Financial Crime; and(j) any other relevant matters.(2) The Regulator will, in assessing the matters in (1), consider the cumulative effect of factors which, if taken individually, may be regarded as insufficient to give reasonable cause to doubt the fitness and propriety of an applicant.
GEN 5.2.10(1) In assessing whether an applicant is capable of being effectively supervised by the Regulator, the Regulator will consider:(a) the nature, including the complexity, of the Regulated Activities that the applicant will carry on;(b) the complexity of any products that the applicant will provide in carrying on those activities;(c) the way in which the applicant's business is organised;(d) if the applicant is a member of a Group, whether membership of the Group is likely to prevent the Regulator's effective supervision of the applicant; and(e) whether the applicant is subject to consolidated supervision.
In assessing whether an applicant has adequate compliance arrangements, the Regulator will consider whether it has:(a) clear and comprehensive policies and procedures relating to compliance with all applicable legal requirements including the Rules; and(b) adequate means to implement those policies and procedures and monitor that they are operating effectively and as intended.
In assessing an application for a Financial Services Permission, the Regulator may:(a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;(b) require the applicant to provide additional information;(c) require the applicant to have information on how it intends to ensure compliance with a particular Rule;(d) require any information provided by the applicant to be verified in any way that the Regulator specifies; and(e) take into account any information which it considers relevant in determining whether the applicant will ensure compliance with requirements imposed by the Regulator in the exercise of its functions.
GEN 5.2.13(1) In assessing an application for a Financial Services Permission the Regulator may, by means of written notice, indicate the legal form that the applicant may adopt to enable authorisation to be granted.(2) Where the Regulator thinks it appropriate it may treat an application made by one legal form or Person as having been made by the new legal form or Person.
In assessing an application for a Financial Services Permission authorising the applicant to Operate a Multilateral Trading Facility or an Organised Trading Facility, the Regulator will have regard to, but is not limited to, considering the following matters:(a) whether the establishment of a Multilateral Trading Facility or Organised Trading Facility is, or is likely to be, in the interests of the Financial Services and Markets industry;(b) whether the Multilateral Trading Facility or Organised Trading Facility will or is likely to lead to more efficient price discovery of, or deepen liquidity in, an Investment; and(c) whether there is any risk of market fragmentation, loss of liquidity or inefficiency in price discovery as a result of the proposed Multilateral Trading Facility or Organised Trading Facility operation.